With QuickBooks, there are three distinct concepts of “upgrades”:

• Moving up to a more powerful version of QuickBooks, e.g. going from QuickBooks Pro to QuickBooks Premier.
• Staying within the same version of QuickBooks, but upgrading to the latest year’s software, e.g. going from QuickBooks Pro 2010 to QuickBooks Pro 2011. Intuit does a major upgrade of each of the QuickBooks versions once a year, usually in the Fall.
• Staying within the same version, same year, but upgrading to the latest release, e.g. going from QuickBooks Pro 2011 R4 to QuickBooks Pro 2011 R5. Intuit makes several releases of the same product each year to fix bugs. Those are free.

Let’s start with the last type of upgrade: new releases within the same year. Those are no-brainers. If, when you open QuickBooks, you get an alert saying that there is a new release, go ahead and install it. It’s free and it usually fixes bugs that you should really get fixed.

The decision to upgrade to the latest year of your version of QuickBooks is a bit more involved. Please refer to our other blog on this topic. A rough rule of thumb is to upgrade at least once every three years.

Now, let’s talk about the decision to upgrade from Pro to Premier or from Premier to Enterprise (it is rare to have to make the jump from Pro directly to Enterprise unless you are expecting your company to go through spectacular growth).

The vast majority of small businesses only need QuickBooks Pro. Don’t get fooled by the name of the QuickBooks Premier versions: Contractor, Non-profit, Manufacturing, etc… The fact that you are a contractor doesn’t mean that you need to use the Premier Contractor Edition. You should upgrade to Premier only if Pro is running out of steam or if there is a specific feature in Premier that you need. Premier is significantly more expensive than Pro. We have many clients who bought the QuickBooks Premier version for their vertical and who don’t end up using a single Premier feature. They would have saved quite a bit of money by sticking with QuickBooks Pro, mainly if they have multiple users. We often downgrade them to Pro the following year.

However, there are clear circumstances when an upgrade is required.

• Size of the database. For instance, each version of QuickBooks maxes out at a different number of vendors, customers and other items.
• Number of simultaneous users that you can have in a given QuickBooks file. Pro 2011 maxes at 3 simultaneous users, Premier at 5 and Enterprise at 30.
• Features: the higher versions are more feature rich.

To decide whether to go from Pro to Premier, you can use Intuit’s comparison table.

The decision to upgrade to Enterprise is trickier. Since it is a more costly decision, I recommend to get the advice from an Advanced QuickBooks ProAdvisor consultant. That advice often comes for free if you purchase the software through them, which will be cheaper than on Intuit’s site anyway. Intuit doesn’t undercut its resellers.

Upgrading from one version to the other has been made very easy by Intuit. That’s how they make money. Downgrading is harder. If you are in QuickBooks Premier and your database is small enough, you can open your file in QuickBooks Pro. You may lose certain features, but you won’t lose data. If you are in Enterprise and assuming that your database is small enough for Pro or Premier, you have to go through 3rd party tools to migrate your data. There is unfortunately no easy path for that process. Some ProAdvisor consultants specialize in that procedure and can help you out.